REVENUE PRODUCING.

Auckland Star, Volume LVII, Issue 208, 2 September 1926, Page 9

REVENUE PRODUCING.

NEW MOTOR CAR DUTIES. VIEWS OF AUCKLAND TRADERS THE CHANGES EXPLAINED. Auckland motor traders consider that the Government's new motor car duties are intended for revenue-producing purposes, and that they will not have any marked effect upon the course of trade. The new duties affect not only motor car bodies, but also motor tyres and bicycles (both motor bicycles and ordinary "bikes"). Foreign-made cars, bicycles, tyres, etc., will pay an extra ten per cent. The present duty of ten per cent ad valorem on British motor vehicles will remain, and the ad valorem duty of 25 per cent on foreign will be raised to 35 per cent. The flat rate on motor bodies will become .an ad valorem rate, which will be levied as on the value of the whole car (not the body alone), but which will be reduced in percentage when it comes to be levied on dearer cars, so that the tax will not become too heavy. To illustrate this point take the case of British cars. Under the Government's new plan, a British motor car valued at £200 will pay ten per cent duty on that amount (yielding £20), and also another ten per cent duty on that amount as body duty (yielding another £20); so that the total duty on this £200 British car will be £40. Now, suppose the- British car is worth £400; it will be taxed at ten per cent on £400 (yielding £40), but the second ten per cent (as body duty) will be levied not on the whole £400, but, only on the first £200 (yielding £20), and the second £200 of car value will be charged (as body duty) only 5 per cent, yielding £10; total yield of tax on the £400 car, £70. If the so-called body tax were not reduced in rate after passing the £200 value mark, then the total yield in tax would have been £80; and on an £800 car it would have been £160, which figures the Government deems too high. Under the plan adopted the £800 car will be taxed £130 (10 per cent on £800, plus 10 per cent on £200, plus 10 per cent on £600). So much for British cars. On foreign cars the percentage charged (as body duty) on value in excess of £200 will be 7J per cent, as compared with 5 per cent on the British. The Minister of Customs appears to think that if a £20 levy on a £200 car is sufficient to protect "the New Zealand motor body builder, his protection does not need £40 on a £400 car; £30 should be enough. The extra ten per cent on foreign motor tyres should prove a heavy item. The full ramifications of the new duties are hardly yet realised, but they will be considerable. All-round Increase. "The new duties will slimply mean an all-round increase in» revenue to the Government," said Mr. G. W. Spragg, ex-president of the Auckland MotorTraders' Association to-day. Explaining the position, he pointed out that the tariffs on English and foreign cars had both been put up together; but the increase had been greater on foreign cars. The difference, however, was not sufficiently great to make the preference effective. Tha English cars were higher priced than the American cars, and he did not consider that they would be able to compete seriously, even on the new basis. Mr. F. G. Farrell, president of the Motor Traders' Association, said that all Auckland dealers in American cars were up in arms against the new regulations. They considered the trade should have been given an opportunity ol stating its case, instead of being* suddenly loaded with a tariff that would add to the price of all care. The English car, he admitted, would not be affected to the same extent as the American. Actually, the English makes, particularly in the lower price ranges, were not being penalised to any great extent, and the average duty that would be paid on cars at popular prices would be only from £10 to £15 each. The Building of Bodies. With regard to the increased tariff on motor bodies, Mr. Farrell said that the coach-building industry was totally unable to cope with the production of bodies in quantities, and at prices that could compete with the imported bodies. It was, therefore, inevitable that the increased duty would be nassed on to the buying public. People were not to be deterred from buying cars. He scouted the idea of any reduction in the demand. No evasion of the duty was to be expected along those lines. It would be passed on to the buying public; and no compensating benefit would accrue to the traders or users of motor cars in this country. If the intention of the Government was to protect the coachbuilders, the factories must be equipped in New Zealand that could turn out motor bodies. The claim of the motor body builders was that they were entitled to protection, and they argued that they could not develop their factories without it. It was quite possible that, owing to the increased tariff, the importers of American cars would be forced to get their bodies landed in sections and have them assembled in New Zealand. Australia had adopted the policy of prohibiting the importation of motor bodies altogether, and the effect of that had been to establish large body-building establishments in the Commonwealth. These I establishments were now supplying practically all the motor bodies used in Australia. Mr. G. W. Spragg considered that an enormous plant would have to be set up in New Zealand to compete effectively with the large American and English plants. All production costs were much higher here. And if bodies were built in New Zealand chasses would have to be imported for them. This he considered an unthought-of thing, as the cost of chassis and body together was at present very little more than that of a chassis by itself. What the Government had called a body duty was not really a body duty at all, but was imposed on the complete car. The two duties, the one on the body and the other on the car, would mean a full 50 per cent tariff i» the case of all American cars. "And I don't think this will have the effect of shutting the American cars out or favour English cars to any important extent," Mr. Spragg concluded.